UAE payroll requires: WPS salary transfer within 15 days of the pay date (AED 5K/employee penalty if late); end-of-service gratuity of 21–30 days per year; 30 days annual leave after one year; 60 days maternity leave (45 full + 15 half pay); and Emiratisation quotas for private sector employers with ≥50 staff.
WPS — the Wages Protection System
The Wages Protection System (WPS) is a mandatory electronic salary transfer system operated by the Central Bank of UAE and overseen by MOHRE. All private sector employers in the UAE must pay employee wages through WPS within 15 days of the agreed pay date.
WPS applies to all employees on UAE work permits — including those in free zones (where the free zone authority administers WPS compliance). Non-WPS payments (cash, cheque, foreign bank transfer) do not satisfy the obligation.
If wages are not transferred via WPS within 15 days of the due date: AED 5,000 per employee per month. For a company with 20 employees, that is AED 100,000 — but capped at AED 50,000 per employer per violation. Repeat violations escalate to work permit bans and business licence suspension.
End-of-service gratuity — calculation rules
UAE Labour Law requires employers to pay an end-of-service gratuity to every employee who completes at least one year of continuous service. The calculation:
- First 5 years: 21 calendar days’ basic salary per year of service
- Above 5 years: 30 calendar days’ basic salary per year (from year 6 onwards)
- Maximum cap: Total gratuity cannot exceed 2 years’ total basic salary
- Basis: Basic salary only — housing allowance, transport, commissions are excluded from the calculation base
- Resignation before 1 year: No gratuity. Resignation after 1–3 years: full gratuity entitlement (UAE Labour Law 2021 removed the old pro-rata reduction on resignation)
A common cash-flow shock: a long-serving employee resigns and the gratuity bill is AED 200,000 that the employer hasn’t reserved. Provision gratuity monthly (21/30 days × basic salary ÷ 12) and park it in a separate account. Some employers use DEWS (DIFC Employee Workplace Savings) or Hayakum for structured gratuity savings.
Annual leave, public holidays, and sick leave
| Leave type | Entitlement | Key rule |
|---|---|---|
| Annual leave | 30 calendar days/year (after 1 year); 2 days/month in first year | Can be carried forward; cash-out on termination at basic salary |
| Public holidays | 14 official UAE public holidays per year | Must be paid; if required to work, add-day or overtime applies |
| Sick leave | 90 days per year: first 15 full pay, next 30 half pay, next 45 no pay | Must be supported by a medical certificate from a licensed facility |
| Maternity leave | 60 days: 45 days full pay + 15 days half pay | Can start up to 30 days before expected due date |
| Paternity leave | 5 days within 6 months of birth | Introduced under UAE Labour Law 2021 |
| Parental leave (bereavement) | 5 days for death of spouse; 3 days for parent/child/sibling | Paid leave; separate from annual leave entitlement |
Emiratisation — quotas and penalties
Private sector employers with 50 or more employees are required to meet Emiratisation quotas — a minimum percentage of UAE national employees. MOHRE and NAFIS administer Emiratisation for mainland employers; free zones have separate requirements.
The target is 2% of skilled workforce per year (for qualifying roles), with annual increments. Employers who miss Emiratisation targets pay a monthly contribution to the NAFIS fund per unfilled UAE national role.
Need full UAE payroll compliance handled monthly?
We process WPS-compliant salaries, provision gratuity, track leave balances, and submit MOHRE filings. Fixed monthly fee, no surprises.
Frequently asked questions
What is the WPS deadline for UAE payroll?+
Wages must be transferred via the Wages Protection System within 15 days of the agreed pay date. Late payment: AED 5,000 per employee per month (capped at AED 50,000 per employer). Repeat violations can lead to work permit bans.
How is UAE end-of-service gratuity calculated?+
21 calendar days’ basic salary per year for the first 5 years, then 30 calendar days per year from year 6 onward. Maximum: 2 years’ total basic salary. Housing, transport, and variable pay are excluded from the gratuity base.
What is UAE annual leave entitlement?+
30 calendar days per year after completing one year of service. In the first year, 2 days per month accrue. Annual leave is paid at basic salary rate. Cash-out of unused leave applies on termination.
How many days is UAE maternity leave?+
60 days total: 45 days at full basic salary + 15 days at half pay. Can start up to 30 days before the expected delivery date. Paternity leave: 5 working days within 6 months of birth.
What is Emiratisation in UAE?+
A MOHRE requirement for private sector employers with 50+ employees to hire a minimum percentage of UAE nationals in skilled roles. Employers who miss targets pay a monthly NAFIS contribution per unfilled national role.
Do free zone companies need to comply with UAE Labour Law?+
Most free zone companies must comply with UAE Federal Labour Law (UAE Labour Law 2021). DIFC and ADGM operate under their own employment regulations, which differ in some areas (notice periods, severance) — though broadly aligned with UAE Labour Law principles.